Blog My Brain

After some discussion with my friend M and some more thinking,  I’ve decided that what I’ve learned in playing starcraft beats many eduction I’ve received.
 
 
Here are my reflections on the wisdom obtained by playing starcraft:
 
 
1. Getting Rich.   One of the most useful concepts in the book Rich Dad, Poor Dad is the way to financial freedom can be achieved by building a portfolio of passive income streams.   Being a starcraft player, I’ve known this concept for years.  How do you get a lot of resources (being rich) in starcraft?  You build a Probe/SCV/Drone, and it goes to mine resources.  Then you use what he mined to build another  Probe/SCV/Drone.  Soon, you realize you are rich.  The Probe/SCV/Done in Rich Dad’s term is “income generating assets”.  You use the income generated by these assets to acquire more such assets, and soon you will be filthy rich.
 
 
2.  Quality Management. As much as my management professor stresses on Deming’s PDSA cycle,  nothing teaches the continuous improvement concept better than starcraft.  PDSA is Deming’s model for constantly improving quality through Plan (Define the problem and create an improvement plan), Do (Execute the plan), Study (Study the results), Act (Standardize or Improve the process).   In starcraft, we improve our skills using the PDSA cycle unconsciously.  We think about why we lose, hypothesize a way to improve out game, try it out in battlenet, study the impact, and use it in future games if it works great.
 
 
3.   Finance & Investment.   Each starcraft game involves a series of financial and investment decisions.  When you spend money to build a unit or building, you are putting down money in expectation of future benefits.  In essence, in playing starcraft, we learn to deal with uncertainties and risks.  For example, when we decide to build a science facility rather than defensive units, we are taking risks that if we get rushed, this investment would render useless.   On the other hand, when we decide to rush the opponent, we are risking the development in exchange for a high chance of winning the game.   After all, managing risk/reward is the core of finance and investment.
 
 
4.  Team Work & Leadership.   When playing in battlenet, starcraft players form different teams in games.  Therefore to win online battles, team work is extremely important.   We have all learned what is good team behavior, what is bad ones, and how to deal with bad team players.  The coordination, cooperation and execution involved in a good starcraft battle is exactly what leadership classes teach us to do.
 
 
5.  Economics.   In a starcraft game, there are supply and demand of resources, science, military power, strategic positions, etc.  Whatever action you make, you learn to ask yourself, “is it worth it?”  We learn to constantly make cost/benefit analysis and optimize the allocation of limited resources.
 
 
6.  Business Management. Starcraft shows us that a good strategy is not enough to win.  To carry out the good strategy, we need good execution.  A high-speed execution involves the efficient use of various keyboard shortcuts.   Many companies fail not because they have the wrong strategy, but because of their failure to execute the strategy due to the lack of coordination or skillsets.
 
 
7.   Grand Perspective. When playing starcraft, we learn to think like the CEO or upper management.  The military units represent the people work under us (middle management, project teams, professionals).   They are just replaceable parts of the system.   At the time of crisis, we are all dispensible at the benefit of the company we work for.
 
 
8.  Psychology of Aggression & Competition.   Starcraft brings us the following psychological experiences:  rushing pleasure of winning,  team bonding in the face of a common enemy, the positive relationship between caring about something and the time/energy/emotion invested in it, etc.

admin :: Dec.15.2007 :: Business/Management, Psychology, Strategy, Finance/Investment :: No Comments »

Today I just finished reading Robert Cialdini’s famous book: Influence: Science and Practice.
   
   
The book explained human behavior has various “rule of thumb” which are the results of evolution.
   
   
Reciprocation - We want to give something back when we received a favor. This principle is behind many marketing and sales campaigns in which a small gift or favor is given to a potential customer to induce their business or loyalty.
   
   
Commitment and Consistency - We hate to change our decision or belief once we are committed, especially when we make the commitment public. Our behavior wants to be consistent with what we believe or say we believe. Vice versa, our belief can be gradually changed to be consistent to how we behave. This principle is the reflection of cognitive dissonance in psychology. It is applied a lot in brain-washing techniques used by communist, fascist and religious groups. In investment, it causes us to stick with a losing stock because we are committed to think that it is a winning stock.
   
   
Social Validation - We tend to follow what the majority of the crowd do, or we want to be approved by our social group. Viewers will feel that the TV Sitcom is funnier when fake laughs are added. Peer pressures among teenagers have a huge effect on their behavior. In the investment world, we want to follow tips, buzz, hot picks by professionals, etc. In addition, we also like to buy stocks that are popular.
   
   
Liking - We tend to say Yes to the people we like. That’s why word of mouth marketing (viral marketing) is so much more efficient. That’s also why a good sales person will try to build rapport with you before he tries to sell you anything. That’s also why we tend to buy the stock we like without doing adequate research.
   
   
Authority - We tend to follow orders from higher authority even if the order is obviously wrong and ridiculous. This effect is discovered during the famous Milgram Experiment. It turned highly educated and civilized people into monstrous war criminals during the Second World War. “Simply following orders” is a very scary psychological manipulation. In the investment world, we tend to follow the recommendations of authoritative figures.
   
   
Scarcity - We find scarce things more attractive and valuable. This is why diamonds although useless to most people, are much more expensive than clean air. This is more than the supply and demand curves in economics. This is saying, limited supply can created extra demand because people irrationally mis-value scarce things. When investing, we tend to believe scarce information.
   
   
These psychological biases are part of human nature. Their effects increase dramatically when there are uncertainties involved because in the lack of better information, we rely more on our instinctive “rules of thumb”.
   
   

Influence: Science and Practice

admin :: Dec.01.2007 :: Psychology, Finance/Investment :: No Comments »

Stephen Petranek, the Ex Editor in Chief for Discover Magazine, talks about the possible ways our world could end. It is very interesting as he ranks the probabilities of different disastrous events. His futuristic advises actually makes a lot of sense after listening to his arguments.

admin :: Dec.01.2007 :: The World :: No Comments »